IRS to face massive strain under GOP tax law

Ready for tax season? What you need to know

"It cannot answer the phone calls it now receives, much less the phone calls it can expect to receive in light of tax reform, without adequate funding".

"Funding cuts have rendered the IRS unable to provide acceptable levels of taxpayer service, unable to upgrade its technology to improve its efficiency and effectiveness, and unable to maintain compliance programs that both promote compliance and protect taxpayer rights", she wrote.

The report said that the agency's decision to assign some taxpayer accounts to private collection agencies in April 2017 cost $20 million to run, and collected $6.7 million in tax payments.

The IRS expects it will receive almost 155 million individual tax returns this season. Also, after the IRS processes a refund, it can take additional time to be processed by your financial institution. "'Shortcuts" have become the norm and "shortcuts' are incompatible with high-quality tax administration". Typically the IRS receives more than 100 million phone calls a year.

In addition to dealing with the new tax law, the IRS must balance other priorities, including the president's May 2017 executive order mandating all federal agencies to meet certain cybersecurity requirements.

As one example of the challenges the agency faces, and the questions the IRS can expect from taxpayers, the new law reduces the maximum home mortgage eligible for the mortgage interest deduction from $1,000,000 to $750,000 for indebtedness incurred after December 15, 2017.

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Another reason additional funds are needed is that although the tax bill was originally promoted as a simplification of the code, new complications have been added in some cases, including exemptions for most refinancings of home mortgages and loans closed after December 15 that had prior binding purchase contracts.

She notes that there has already been considerable public confusion about withholding changes, the deductibility of prepaid property taxes, and whether states may let taxpayers make charitable contributions in lieu of taxes to claim larger deductions than otherwise would be allowed now that there is a new $10,000 cap on the state and local tax deduction. Until those tables are provided to employers and payroll companies, workers who are due to receive tax cuts won't see bigger paychecks. In other words, most people who submit their returns at the start of filing season can expect their refunds in mid-to-late February.

"The IRS will have a lot of issues to work through, and taxpayers will have a lot of questions", National Taxpayer Advocate Nina Olson said in a news release Wednesday.

The IRS "strongly encourages" people to file their tax returns electronically for faster refunds.

There are a variety of options to get help filing and preparing tax returns by visiting IRS.gov, where taxpayers can find answers to tax questions and resolve tax issues online.

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